Question: 4. Shown below are details for two proposals. Evaluate this proposal using payback, discounted payback, net present value profitability index, and internal rate of return.
4. Shown below are details for two proposals. Evaluate this proposal using payback, discounted payback, net present value profitability index, and internal rate of return. Show your work. Make a recommendation on which proposal to accept (if either), and explain your decision. Project Data Time horizon Installation costs Cost savings each year Incremental revenue each year Project A 5 years $100,000 $15,000/year $65,000/year Project B 5 years $200,000 $18,000/year $62,000/year Lease payments per year Estimated economic life Straight line depreciation with salvage of... Cost of capital Tax Rate $25,000 5 years 0 1496 Not applicable $35,000 5 years $30,000 1496 Not applicable
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
